Boeing 2007 Annual Report Download - page 30

27
Management’s Discussion and Analysis
firm orders, letters of intent from prospective customers,
and market studies. We review our program accounting
quantities quarterly.
Commercial aircraft production costs include a significant
amount of infrastructure costs, a portion of which do not vary
with production rates. As the amount of time needed to pro-
duce the accounting quantity decreases, the average cost of
the accounting quantity also decreases as these infrastructure
costs are included in the total cost estimates, thus increasing
the gross margin and related earnings provided other factors
do not change.
The accounting quantity for each program may include units
that have been delivered, undelivered units under contract, and
units anticipated to be under contract in the reasonable future
(anticipated orders). In developing total program estimates all
of these items within the accounting quantity must be consid-
ered. The table below provides details as of December 31:
Program
717 737 NG 747 757 767 777
2007
Program accounting quantities 156 3,800 1,474 1,050 998 950 *
Undelivered units under firm orders1 2,076 125 52 357 817
Cumulative firm orders (CFO)2 155 4,542 1,521 1,049 1,011 1,044
Anticipated orders N/A N/A N/A N/A N/A N/A
Anticipated orders as a % of CFO N/A N/A N/A N/A N/A N/A
2006
Program accounting quantities 156 3,200 1,449 1,050 985 900 *
Undelivered units under firm orders1 1,560 116 28 299 448
Cumulative firm orders (CFO)2 155 3,696 1,496 1,049 975 903
Anticipated orders N/A N/A N/A N/A 8 N/A
Anticipated orders as a % of CFO N/A N/A N/A N/A 1% N/A
2005
Program accounting quantities 156 2,800 1,424 1,050 971
800 *
Undelivered units under firm orders1 5 1,123 58 30 288 287
Cumulative firm orders (CFO)2 155 2,957 1,424 1,049 965 827
Anticipated orders N/A N/A N/A N/A 3 N/A
Anticipated orders as a % of CFO N/A N/A N/A N/A 0% N/A
*The accounting quantity for the 787 program will be determined in the year of first airplane delivery, targeted for 2009.
1 Firm orders represent new aircraft purchase agreements where the customers’ rights to cancel without penalty have expired. Typically customer rights to cancel
without penalty include the customer receiving approval from its Board of Directors, shareholders, government and completing financing arrangements. All such
cancellation rights must be satisfied or expired prior to recording a firm order even if satisfying such conditions are highly certain. Firm orders exclude option aircraft
and aircraft with cancellation rights.
2 Cumulative firm orders represent the cumulative number of commercial jet aircraft deliveries plus undelivered firm orders.
737 Next-Generation The accounting quantity for the 737
Next-Generation program increased by 600 units during 2007
due to the program’s normal progression of obtaining addition-
al orders and delivering aircraft.
747 Program The accounting quantity for the 747 program
increased by 25 units during 2007. In the fourth quarter
of 2007 we completed firm configuration of the 747-8
Intercontinental airplane and during 2006 we completed firm
configuration of the 747-8 Freighter. While there are always
risks to development, production and certification schedules
in the introduction of a new commercial derivative airplane,
deliveries of the first 747-8 Freighter and Intercontinental
airplane are targeted for late 2009 and late 2010.
767 Program The accounting quantity for the 767 program
increased by 13 units during 2007.
777 Program The accounting quantity for the 777 program
increased by 50 units during 2007 as a result of the program’s
normal progression of obtaining additional orders and deliver-
ing aircraft. Firm configuration of the 777 Freighter was com-
pleted during 2006. Deliveries of the first 777 Freighter are
targeted for late 2008.
787 Program We are in the very critical stages of final assem-
bly and planning for flight test, and the risks that are always
inherent in these latter stages of airplane production still
remain. We continue to address challenges associated with
assembly of the first airplanes, including start-up issues in our
factory, management of our extended global supply chain,
completion and integration of traveled work and reconciliation
of the airplane’s configuration with supplier and partner engi-
neering. In January 2008 we announced that first flight of the
787 has been moved from the end of the first quarter of 2008
to around the end of the second quarter of 2008 to provide
additional time to complete assembly of the first airplane.
Deliveries are now expected to begin in early 2009, rather than
late 2008. We continue working with our customers and sup-
pliers to assess the specific impacts of the schedule change
on the flight test program and entry into service.
Fleet Support We provide the operators of our commercial air-
planes with assistance and services to facilitate efficient and
safe aircraft operation. Collectively known as commercial avia-
tion support, these activities and services begin prior to aircraft
delivery and continue throughout the operational life of the air-
craft. They include flight and maintenance training, field service
The Boeing Company and Subsidiaries
787